Monica's view: Why Ofgem’s REM report matters
Blog
Monica Gandolfi
Publication date
Industry sector
Supply and Retail Market
A crucial part of our role is to shine a light on how energy markets work. The trusted and authoritative data we publish offers a detailed insight into the market. Monica Gandolfi, our Senior Economist for Consumers and Competition, explains why our retail energy market report matters.
This week we published our second annual retail energy market report.
Pulling together data from sources across the retail market, the report measures market trends against our strategic aims for consumers.
Put simply, it measures how well the retail market delivers on lower bills, a better quality of service, more benefits for society as a whole, and reduced environmental damage.
Despite more suppliers for customers to choose from, the retail market continues to fall short for many.
The report reveals that, despite there being more suppliers for customers to choose from, overall the retail market continues to fall short for many. Whilst the report does not assess the state of competition in the market, our evidence supports the conclusions of the recent Competition and Markets Authority (CMA) investigation; that the retail market is functioning as a two-speed market. Good deals are out there for engaged customers, but far too many miss out and are left behind on poor deals where they are financially worse off.
On delivering lower bills, the gap between the most expensive standard variable tariffs (SVTs) and cheaper fixed tariffs has widened to around £300. And, whilst the number of households on pricier SVT accounts fell from 69 percent to 66 percent, many customers still remain on expensive tariffs when they could get cheaper deals.
On customer service the market's delivered a mixed performance. Overall the number of customer complaints has reduced and satisfaction has improved. However, customers are more dissatisfied with how suppliers handle complaints, and it’s taking longer for suppliers to resolve issues.
Meanwhile, the benefits of the market aren't being spread throughout all of society. Consumers on Pre-Payment Meters (PPMs), who are more likely to be financially vulnerable, still face more expensive tariffs. They also have less choice, and have more difficulties when they try to switch suppliers.
More positively, there’s a growing number of cheaper ‘Smart’ tariffs available for PPM customers and the number of consumers in debt is falling.
The growth of new technologies means there are ever more ways for consumers to generate their own energy and monitor their consumption. This gives consumers more scope to play an active role in generating a less carbon-intensive and more flexible energy system.
As in 2015, this report is part of a wider package of monitoring publications, including an annual report on recent developments in the wholesale markets; a report detailing trends in liquidity in the wholesale electricity market; and an updated suite of indicators on energy markets and customer service. Alongside this report, this year we have also published a consultation seeking views on how we should monitor and report on trends in suppliers’ costs to replace our old supply market indicator.
Our monitoring and research work helps us to make the energy market as transparent as possible so everyone can see how the market is working. It helps us to shape our future policies and measure the impact of our current regulations. We'll use it to make sure that GB’s energy market leads the way in competitiveness and efficiency, for all energy consumers now and in the future.